Box Total Economic Value

Total economic value has become a widely used framework for looking at the value of eco-systems.TEV is typically disaggregated into two categories, use values and non-use values. Use value has three elements: Direct use value, which is mainly derived from goods that can be extracted, consumed, or enjoyed directly. Examples include drinking water, fish, and hydropower, as well as recreation activities.

Indirect use value, which is mainly derived from the services that the environment provides, including regulation of river flows, flood control, and water purification.

Option value, which is the value attached to maintaining the possibility of obtaining benefits from ecosystem goods and services at a later date, including from services that appear to have a low value now but could have a much higher value in the future because of innovations in management or new information.

Non-use values, on the other hand, derive from the benefits that ecosystems may provide that do not involve using them in any way, whether directly or indirectly:

Bequest value is the value derived from the desire to pass on ecosystems to future generations.

Existence value is the value people derive from knowing that something exists even if they never plan to use it. Thus people place value on the existence of blue whales or pandas even if they have never seen one and probably never will, as demonstrated by the sense of loss people would feel if these animals ever became extinct.

Source: See endnote 16.

Total Economic Value

Use Value

Non-Use Value

Use Value

Non-Use Value

Direct Use Value

(resources used directly)

•Provisioning services (ex. water, fish) •Cultural and amenity services (ex. recreation)

Indirect Use Value

(resources used indirectly)

• Regulating services (ex. flood prevention,water purification)

Option Value

(our future possible use)

•All services (including supporting services)

Bequest Value

(future generation possible use)

•All services (including supporting services)

Existence Value

(right of existence)

•Supporting services (ex. panda, blue whale, wild eagle)

Principle 4 was included to highlight the importance of recognizing the full range of economic values that can be derived from water, of allocating all water resources effi ciently and equitably, and of delivering water services (including sanitation and wastewater treatment) cost-effectively.

Recognizing water as an economic good

SPECIAL SECTION: PAYING FOR NATURE'S SERVICES Water in a Sustainable Economy

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